Circuit City Business Case Study

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Circuit City grew, from a small business in 1949, to become the “nation's second largest retailer of consumer electronics, personal computers, and entertainment software,”1 to closing its doors in 2009. What would cause a company, this successful, to go from second in the nation to liquidating its assets and closing its doors? We will explore the actions which led Circuit City to close the doors of its 1,520 stores and left 46,000 employees searching for new jobs. Circuit City was founded by Samuel S. Wurtzel, an importer-exporter who owned a business in New York. Wurtzel had sold his business and was vacationing in Richmond Virginia, in 1949 when he went on to get a haircut and while he chatted with the barber. He learned that the first commercial…show more content…
With all the revenue, he bought multiple companies like Custom Electronics. That company owned about four stores in Washington D.C area. Wards continued its rapid expansion to Mid-Atlantic States by buying certified TV and Appliance Company of Virginia Beach, Virginia. The company rapid expansion continued in 1970’s. From 1968 through 1982 Circuit City store held the largest market share. In 1968 the Circuit City Company owned four stores in the Washington, D.C. area and also ran 9 stereo departments from Mobile, Alabama to Albany, New York. Wards rapid expansion in the Mid-Atlantic States was so successful that Ward decided to branch out “The Mart Company”, located in Indianapolis, Indiana. By 1970 some of the power was transferred from the founders of the company to a younger generation. From founder, Samuel Wurtzel, to son Alan Wurtzel, who was named president of the Ward Company. As president, Alan Wurtzel was the first to start investing in many new projects. The first, among his many moves, was the opening of two specialty stores in Richmond, called Sight 'N Sound, which sold only audio equipment. In an effort to eliminate weaker areas of the company, he closed the store that Wards had purchased two years earlier and shut down three stores in Virginia. Wards began to suffer the effects of his company rapid expansion especially into areas not related to its core business…show more content…
$50 million dollars Of Circuit City money is used to fund the project and the first CarMax opened in 1993. The CarMax business turns out to be a very successful and by the year 2000 it records a profit of $1.1 million. In 2002 CarMax separates from Circuit City and becomes an independent company. The second venture considered by Sharp, which was not so successful, was DIVX. “The premise was that consumers could buy a DIVX-encrypted movie and then watch it on a special DVD player as many times as they wanted within a 48-hour period.”2 But the venture was a failure because consumers did not like it and other stores refused to carry the DVD’s. As the focus was on CarMax and DIVX, the neglect of Circuit City allowed Best Buy to gain on the market. To Circuit City, Best buy was not a threat. In 2000 when Alan McCollough replaced Rick Sharp as CEO, Best Buy’s was making higher earnings than Circuit City. Another bad move by Circuit City in 2000, was to stop selling appliances during a time when there was a surge in home sales and the consumer need for

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